Sunspot Cycles & Recessions

Source: http://www.oftwominds.com/blogdec13/case-for-crash12-13.html

This is very interesting.  Note that the 2007-2009 recession does not fit, but other than that it is an amazing correlation or coincidence.

Look at the last few sunspot cycles:
cycle 21 - began June 1976, peak month Dec. 1979
cycle 22 - began September 1986, peak month July 1989
cycle 23 - began May 1996, peak month March 2000
cycle 24 - began January 2008, peak in 2014
cycle 25 (predicted) - to begin about January 2019, peak about 2025

Now look at the list of recessions:
Jan-July 1980 and July 1981-Nov 1982
July 1990-March 1991
March 2001-Nov 2001
Dec 2007-June 2009 (Great Recession)

As mentioned, the Great Recession does not fit the pattern.  The average solar cycle lasts 11.1 years, but the last one, from May 1996 to January 2008 lasted 12.6 years.  The peak month usually occurs 3-4 years after the beginning of the cycle, but historically it has been as many as 6 years.  The recession usually follows the peak month by 6-12 months.

What is the current solar activity?
"The sun's current space-weather cycle is the most anemic in 100 years, scientists say.

Our star is now at "solar maximum," the peak phase of its 11-year activity cycle. But this solar max is weak, and the overall current cycle, known as Solar Cycle 24, conjures up comparisons to the famously feeble Solar Cycle 14 in the early 1900s, researchers said."

http://www.space.com/23934-weak-solar-cycle-space-weather.html

What happened in Solar Cycle 14? It began on February 1902 and peaked in February 1906.  This was followed by the Panic of 1907 starting with a bank run on October 22, 1907.  The stock market dropped by 50% during this period.

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The correlation between sunspots and business crises is not new.  It was mentioned by British economist William Stanley Jevons in 1878 in his book "'Commercial Crises and the Sun-Spots".

 Jevons now argues that the recurrence of crises depends mainly on commerce with the East, and especially with India and China, where famines occur with the same periodicity as sunspots.  The failure of harvests in the East leads to a reduced exportation of European goods.  There is no relationship between the extent of manias or crises and the variation in foreign trade, but this variation forms the impulse for commercial changes in the West.  The impulse from abroad is like the match which fires the inflammable spirits of the speculative classes.

Much has been written about the absurdity of Jevons' sunspot explanation for business cycles.  However, Peart (1991) emphasizes that this theory is much more than a simple meteorological explanation of economic phenomena, because of Jevons' attention to mood fluctuations.  Price fluctuations due to harvest failures give rise to changed 'moods' of economic agents.  This results in altered investment decisions that multiply the effect of the harvest cycle, especially when 'mistaken' decisions are involved.  Source: Jevons' Economics by Bert Mosselmans.